The I's & E's: Infrastructure, Inflation, Earnings, and Elon | Market News Sentiment Review 11/8-11/12 👀
Market sentiment rose again on the week behind earnings and infrastructure boosts; inflation remains a cause for concern. We dive into sentiment for $TSLA, $MSI, $RIDE, $MRVL, and $FITB
Hello and welcome to my weekly review of market news sentiment. I am your host Ramsey Shaffer (@babbldev on Twitter) — thanks for being here, and a HUGE shoutout to the 6 new subscribers to the newsletter this week! We’re now over 200 subscribers (thank you all!) — and if you haven’t already, join our growing lil community here 👇
This past week we analyzed another 979 stock market news articles from across the internet to find stocks worth watching and investing in. Below we’ll highlight the topics and tickers that Wall Street is talking most about this week, and give you some ideas for stocks to buy (and sell) based on their news sentiment. Here’s the breakdown:
This Week’s News Sentiment [1 min read]
Most Mentioned Tickers in News Coverage [2 min read]
Best and Worst Ticker Sentiment [3 min read]
Weekly Market Mood Outlook [1 min read]
1. This Week’s News Sentiment 📰
Stock market news sentiment rose slightly for the third consecutive week, with roughly one-fifth of sentences written about the markets leaning optimistically. The average article written this week scored a 0.19 in terms of sentiment (on a scale from -1.0 being most pessimistic to +1.0 being most optimistic) as the last big group of earnings reports for the quarter continued to exceed expectations. In terms of time-sense, articles this week were relatively neutral, focused slightly more on the future than the past (scoring a +0.02 on a scale from -1.0 being completely past tense and +1.0 being completely future tense). Overall, our algorithms detected a slight increase in bullishness expressed about the markets this week compared to last, driven primarily by the events and topics below:
📈 Stocks: The S&P 500, the NASDAQ, and the Dow all fell less than 1%, snapping a string of five positive weeks in a row. Each of the major indexes retreated from record highs set the previous week as inflation concerns weighed on financial markets1. For context, the S&P 500 remains 12% higher than it was 6-months ago, and more than 30% higher than it was a year ago. With inflation remaining a heavy topic, the price of gold reached its highest levels in 5 months.
₿ Cryptos: The price of bitcoin surged to a record high, only to give up much of its gain later in the week. After ending the previous week at around $61,000, the cryptocurrency briefly surged above $68,000 on Wednesday. Bitcoin couldn’t sustain that peak level, and the price ended the week around $62,000.
🦅 Economy: A monthly measure of U.S. consumer prices climbed to the highest level since 1990, marking the fifth month in a row in which the inflation rate topped 5.0%. The government reported on Wednesday that the Consumer Price Index jumped to 6.2%. Excluding the often-volatile categories of food and energy, the inflation rate was 4.6%. The newly agreed-upon infrastructure bill was also a big talking point this week, reflecting optimistically in the prices of infrastructure-adjacent stocks like Motorola Solutions ($MSI) and Caterpillar ($CAT).
2. Most Mentioned Tickers 📊
Each week we analyze the number of headlines written about each stock and cryptocurrency. The most mentioned tickers in this week’s news and the tickers with the biggest volume increase compared to last week are shown below:
🚗 Tesla Inc. ($TSLA) saw the biggest jump in stock market news coverage and Elon is running the simulation: if everyone in the world is writing about Tesla and Elon musk and we don’t write about it, are we really doing our job? $TSLA’s stock dropped 10% on the week after Tesla CEO Elon Musk sold $1.2 billion dollars worth of his personal holding (which, if you’re counting, only equates to about 3% of his stake in the company). The decision was made for Musk after he released a Twitter poll last week asking people to decide if he should sell his holdings as a way of increasing his tax liability — 58% of responders said yes, and he followed through, taking Tesla’s share price down with it.
The whole thing is really interesting — and Elon clearly benefits either way from the results of the poll. While some have commended Musk for the decision, others have called it an outright abuse of his power as CEO (and richest man in the world). At the end of the day, as the old saying goes: all publicity is publicity (!!), and Elon is definitely having a lot of fun with it; some may argue too much fun. Notable naysayers to the decision include senators of the likes of Ron Wyden and Bernie Sanders — both of whom voiced their displeasure with his “reckless behavior” on Twitter and got burned by Musk himself (the memes are truly out of this world). We’ve said it before and we’ll say it again: it’s Elon’s world and we’re all just living in it:
Elon Musk @elonmuskMuch is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?
3. Sentiment Winners and Losers 👍👎
Each week we summarize the most extreme sentiment scores in the news for each ticker to help you decide where to focus your attention. Here’s a look at which tickers scored the highest (and lowest) in terms of optimism, pessimism, speculation, and reaction expressed in this past week’s news:
Sentiment: Most Optimistic😀 and Pessimistic😒 Tickers
📡 Motorola Solutions Inc. ($MSI) saw optimistic sentiment after bucking its big earnings bets: Motorola solutions stock rose 1% to $251.44 per share after announcing strong Q3 earnings last Friday. In their quarterly report, Motorola posted net earnings of $1.76 per share (a significant improvement from its $1.18 earnings per share in 2020), beating analyst consensus estimates by roughly 22 cents per share. Management highlighted that the strong results were driven by their diligent execution of operational plans and healthy growth dynamics backed by solid order trends.
Infrastructure telecom stocks like $MSI and $QCOM have seen plenty of news optimism in recent weeks behind the headwind of Biden’s multi-billion-dollar infrastructure bill. After months of congressional negotiation, the bill has finally been passed, it’s bipartisan, and seems relatively urgent moving forward — we will surely see a massive push to upgrade broadband internet access across America within the next few years; trillions will be spent, and fortunes will be made. All of this to say, Motorola Solutions seems set to continue its recent momentum into the future behind its positive post-earnings outlook, and could certainly capitalize on government infrastructure plans to achieve some serious growth in the longer term. This week’s most optimistic $MSI article:
“Motorola Solutions Q3 Earnings Beat on Higher Revenues, Views Up” | Nasdaq
🚙 Lordstown Motors Corp. ($RIDE) dropped hard post-earnings after announcing their EV pickup truck isn’t ready yet. This week in the markets was a big one for electric vehicle stocks — though some boded better than others. Aside from Elon and Tesla, much of the hype centered around the segment’s most recent publicly-traded company Rivian ($RIVN), which made its market debut on Wednesday and has already climbed 30% since. On the other end of the spectrum is another EV start-up: Lordstown Motors ($RIDE).
Lordstown was one of this week’s most pessimistic tickers in news sentiment as its shares plummeted 10% in premarket trading on Friday after the company reported another quarter with no revenue. The fall came behind Lordstown’s announcement to delay the release of its flagship Endurance truck, citing financing and supply chain issues — while the release was originally slated for sometime in 2021, the company now expects the truck to be ready off the assembly line by the third quarter of 2022. In their report on Friday, the company’s loss per share was narrower than expected in its most recent quarter, according to Refinitiv. BTIG also downgraded Lordstown Motors to neutral from buy. All things considered, $RIDE seems bearishly poised heading into the end of 2021, at least until they can prove some real revenues. This week’s most pessimistic $RIDE article:
“Lordstown Motors Delays Electric Pickup Launch Again” | Fox Business
Time-Sense: Most Speculative🤔⏩ and Reactive😮⏮️ Tickers
🦸♂️ Marvell Technology Inc. ($MRVL) hits its all-time high, but chip shortage seems far from over. This week’s most speculative ticker in stock market news was Marvell — no not THAT Marvel — as $MRVL stock has climbed a heroic 69% over the past year to reach its current all-time high. At $73.48 per share, the semiconductor manufacturer’s stock is now trading above its average price target, meaning analysts could react by downgrading their ratings based on valuation, or by re-adjusting their targets to a higher level — both of which remain to be seen.
While the rise in stock price has paired nicely with Marvell’s climbing sales, the global demand for microchips continues to outpace supply and shortages abound. According to Marvell’s CEO Matt Murphy, the “painful period” of the semiconductor chip shortage could extend beyond 2022. While Murphy appears more pessimistic in his outlook than his industry peers, the reality is that many chip manufacturers simply don’t have the capacity currently to produce semiconductors at the rate they’re being bought, and expanding capacity won’t be achieved overnight. AMD and Nvidia have announced plans to expand their factories within the next 12 months. In many places — specifically the automotive industry — the shortage has been daunting and confounding. As for Marvell and other chipmakers, the overwhelming demand seems like a good problem to have, at least as far as their stock prices are concerned. This week’s most speculative $MRVL article:
“Semiconductor Shortage Could Extend Through 2022, Marvell CEO Says” | CNBC
🏦 Fifth Third Bancorp ($FITB) buys a bunch of its stock back and its previous president is back in business: Fifth Third Bancorp was highly reacted to in news coverage this week for a number of reasons. To start, $FITB stock now sits at $44.21 per share after the company bought back $316-million dollars worth of its stock this week, taking 7 million shares out of circulation. This essentially makes existing shareholder’s stakes slightly more valuable by reducing the overall supply, and with the company planning to buy back a total of 100 million shares in the years ahead, investors can expect a lot more of the same assuming the bank’s revenues continue growing. With a 68% price increase over the past year, a price-to-earnings ratio around 12.24, and an expected EPS of $0.91 for its upcoming earnings report, $FITB is making its case to be a noteworthy buy for value investors.
Fifth Third also made headlines this week for extrinsic reasons, as its previous president Jordan Miller has announced he’ll be coming out of retirement to start a Black-owned consumer bank in Colombus alongside a group of civic leaders. While the bank is still awaiting approval from the FDIC, Miller appears set to become its first CEO. This week’s more reactive $FITB article:
“Zacks: Analysts Expect Fifth Third Bancorp (NASDAQ:FITB) to Post $0.91 EPS” | Market Beat
Biggest Mood Swings and Changes 🎭🔀
Each week we compare the sentiment of each ticker to its sentiment from the previous week. Presented below are the tickers that saw the biggest change in each of our four sentiment metrics this week compared to last.
✔️ Intuit Inc. ($INTU) saw the largest increase in optimism this week and its stock is up 13% on the month as it finalized terms to officially acquire the email service giant Mailchimp. The move is boding well with analysts, who are saying Intuit now has all the pieces to give itself a monopoly in the small-business tools market (lest we forget about Intuit’s Quickbooks, TurboTax, and Mint).
💊 Johnson & Johnson ($JNJ) recorded the biggest increase in pessimism this week as analysts grappled with the company’s plans to split into two separate companies: one for its consumer health business and one for its pharmaceutical and medical device operations (there’s a joke in here somewhere about naming one Johnson and the other Johnson).
🏗️ Caterpillar Inc. ($CAT) posted the biggest increase in speculative language expressed this week compared to last after climbing more than 5% on the week toward a new 3-month high, buoyed by congress’ deal to pass the $1.2T national infrastructure bill last week. With so much money to spend, surely Caterpillar’s stock will benefit over the coming months.
🏃♀️ Walt Disney Co. ($DIS) toated the biggest increase in reactive language expressed this week compared to last after falling 10% mid-week on its Q3 earnings report released Wednesday, in which the company highlighted one of its most disappointing quarters of the past decade. While even the most bullish analysts have become more bearish on Disney in recent days, some expect streaming and parks revenues to revive within the next 6 months. The question: is Disney still the happiest place on Earth?
4. Market Mood Outlook 🌡️🔭
The stock and crypto markets both receded slightly from their all-time highs set last week, but news optimism continued to grow on the week. The increase in optimism seems to reflect positive price jumps driven by the finalization of the government’s $1.2 trillion-dollar infrastructure bill, as investors price in their outlooks for stocks that will benefit from most from the deal. Higher-than-expected earnings from the last big group of companies to release their Q3 reports was also cause for optimism on the week.
While infrastructure + good earnings = boon for much of the market, inflation and supply chain shortages remain top of mind of much of this week’s news, and the worst of it seems to be far from over. The Federal Reserve has their work cut out for them in the coming months, though Chairman Powell remains adamant that the pressures will prove to be transitory. This makes some sense to me — looking way back to the throes of the pandemic when seemingly everything came to a stop, it was foreseeable to expect the economy to experience growing pains once we got closer to pre-pandemic normalcy like we are seeing today. The question remains as to how long these growing pains will last; Edward Jones wrote a great piece this week on the current inflationary environment and outlook going forward here if you’re still hungry.
That’s all for this week’s report — if there’s anything we missed, or any tickers you’d like to see more sentiment analysis for, let us know by replying to this email, commenting below, or sending us a message at email@example.com — we LOVE💜 hearing from you all! Keep an eye out this week for a stock sentiment spotlight, and expect some exciting changes to the format of this weekly review in the weeks to come. Good look to all of you in the markets this week, and thank you for reading! 😄🙏
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